Automotive Sector Improves The Better Public Power Purchase

INDUSTRY.co.id - Jakarta- Bahana Securities believes that the recovery in automotive sales will be an indicator of improved public purchasing power, particularly the middle class.

"A number of positive sentiments began to overshadow the Indonesian economy, the recovery of auto sales and motorcycles in the industry is an indicator of improved public purchasing power," said Plt Head of Research and Strategy Bahana Securities Henry Wibowo, quoting ANTARA, Monday (2/10).

Data from the Association of Indonesian Automotive Industries (Gaikindo) showed that car sales grew 5.6 percent in August 2017 compared to the same period last year or 96,461 units.

Thus, total car sales in the period from January to August were 715,291 units, up 3.8 percent on an annual basis.

Meanwhile, the Indonesian Motorcycle Industry Association (AISI) noted that motorcycle sales rose 5 percent over the same period last year to 554,923 units.

Thus, total motorcycle sales from January to August stood at 3.793 million units.

Bahana estimates that by the end of the year, car and motorcycle sales will be in the range of 3 percent-5 percent. Car sales growth is expected to be better than motorcycle sales due to government-run energy reforms since the beginning of the year.

On the other hand, according to Henry, the move by Bank Indonesia (BI) to cut the BI Rate (BI 7-Day Repo Rate) to 4.25 percent in September will be a boost for the recovery of middle and lower class purchasing power.

"One of the sectors that benefited after BI cut its benchmark interest rate in August and September was the automotive sector, because the purchasing power of middle class people in general bought by installment was quite helpful," he explained.